The commissioner has now released a report revealing that "the key" financial failures in the college's financial problems were down to former principal Amarjit Basi's investment in "a number of unprofitable non-core activities".

The report stated: "New College Nottingham has a number of challenges, following a period in which mistakes were made in pursuing schemes that went far beyond the college's core business and which created significant financial difficulties.

"The board was too willing to accept the enthusiasm of the previous principal without undertaking an appropriate cost benefit or risk analysis of new projects, with the result a number of loss-making activities drove the college into deficit.

"Some inappropriate accounting practices also presented a much rosier picture than the reality, and the board committed the college to a new build at Basford Hall without having the necessary funds in place."

Under Mr Basi's leadership the college became a founding member of The Gazelle Group – an association of colleges promoting entrepreneurship and student work experience – believed to have cost £530,000 on top of the £35,000 a year membership fee.

According to the college's financial recovery plan the impact of the programme has "been limited" and as a result membership to the scheme has stopped.

Other projects have also been stopped or sold including 3E Autos in Haydn Road, Sherwood, which was bought by the college to train students and apprentices in the motor trade – however, student training remains at the site in an agreement with the new owners. A cafe and an advertising agency were also set up, but both have now been stopped.

By the end of the year the college hopes to break even.

Principal Dawn Whitemore said: "I think the report is a fair representation of what has happened.

"It is important to recognise we have come a long way since the start of the year when the commissioner visited. When I realised there was a problem I wrote to the commissioner and invited him – it was a devastating situation for us. We are no longer in financial trouble."

Nigel Hallam, Vice Chair, ncn's board of governors, said: "The Board fully accepts the FE Commissioner's findings and we are already well on the way to implementing the report's recommendations in full. We recognise that mistakes were made by the board and have taken the necessary steps needed to ensure this situation will not occur again. We are fully supportive of the FE Review in Nottingham and the opportunity that the single proposition will offer to all Nottingham learners, employers and stakeholders."

He said: "This report is very welcome and it makes clear who is responsible for past errors and where the responsibility lays. Thankfully we now have a very capable principal leading the revival of New College Nottingham."

Amarjit Basi left the college in July 2013 after two years in the role to become Principal at Cornwall College which has nine campuses.

The Post made several attempts to contact Mr Basi at Cornwall College but none of our calls were returned.